Imperial Tobacco Company of India Limited (ITC).

Presented by
ITC. Touching your life. Everyday

Divyashree.M.J.

INTRODUCTION
ITC Limited which previously stood for Imperial Tobacco Company one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Continues in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is gaining market share in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.
ITC. Touching your life. Everyday

Contd..
ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC's Agri-Business is one of India's largest exporters of agricultural products.

ITC. Touching your life. Everyday

Branded Apparel

Hotel

Stationery

Cigarette s

Package d Foods

Incense Sticks

Paperbo ards

Personal Care

Informat ion Technolo gy

Safety Matches Agricult ural Industry

ITC. Touching your life. Everyday

Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure:
Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management
Divisional Chief Executive & Divisional Management Committee : Executive management
ITC. Touching your life. Everyday

Board of directors
Chairman Y.C Deweshwar

Executive Director Anup Singh K.vaidyanath

Non Executive Director Anil Baijal, R.K.Kaul,s.H Khan, S.B.Mathur, D.K Mehrotra, H.G. Powell, P.B Ramanujam, Anthony , B Vijayraghwan, Basudev Sen

Key persons Kurush N Grant, T.V Ramaswamy, Hemant Malik, R Tandon ITC. Touching your life. Everyday of tobacco

VISION & MISSION

Vision: Sustain ITCs position as one of Indias most valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders. Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

ITC. Touching your life. Everyday

Values

ITC's Core Values are aimed at developing a customer-focused, high-performance organisation Customer Focus we are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.

ITC. Touching your life. Everyday

ENDURING VALUE
Expressing concern and desire to help, is the spirit of ITCs rural development initiatives. A social mission reaching out to join hands, convert old relationships into new partnerships, put on the ground solutions that bring lasting benefits to society. . ITC regards corporations as critical tools of social development, and considers public - private - people partnerships bringing together community, government and business as the only sustainable basis for social sector and infrastructure development.

ITC. Touching your life. Everyday

Corporate Social Responsibility

Environmental
1. 2. 3. ITC has been Carbon Positive 3 years in a row. Water Positive 6years in a row. 100% solid waste recycling

1.

Social
ITC's businesses generate livelihoods for over 5 million people.

2. ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families. 3. ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged. 4. ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of dry lands and moisture-stressed areas. 5. ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes. 6. The first ITC Sangeet Sammelan showcasinglife. EverydayIndian classical music was held in ITC. Touching your the best in Delhi in 1971

CORPORATE SOCIAL RESPONSIBILITY

Healthcare services have been provided to over 45,000 mothers-at-risk and children below 5 Women join their ITC supported self-help cow artificially inseminated at ITCs cattle development centre ITC assists rural families to construct low cost sanitary units for their homes

develop water and forest resources to enhance soil fertility, adopt soil and water management practices, the teachers at village ITC Supplementary Learning Centre persuaded parents to send children to evening coaching classes at the Centre ITC. Touching your life. Everyday

ITC offers facilitation to farmers to form agribusiness societies, pool knowledge and resources, improve productivity and quality Over 8 years, ITC has assisted nearly 2,700 families to construct their own sanitary units. apply superior farming methods to improve quality and quantity of farm yields.

Pest analysis
POLITIC AL

Huge burden of VAT Excise duty raised by union budget by 5 % Ban on communication Luxury tax in 10 states Smuggling 100% FDI allowed

ECONO MICAL

Bidee : cigarette ratio-10:1 Profit margin is high Other forms of cheap tobacco intake

SOCIO CULTUR AL

Becoming status symbol Companions mounted by W.H.O. Changing attitudes towards tobacco May 31 is no tobacco day Change in life style

TECHNICAL

State-of-the-art factories Cheap labour supply Development of IQMS ITC. Touching your life. Everyday Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma

SWOT Analysis
Strength Cigarette market is 22,000 cr and ITC has lions share in it Strong brand recognition and product portfolio Distribution network Management Opportunity Low per capita consumption Of personal care products Rural Market E-Choupal Filter cigarette segment of less than 60mm size Weakness Dependence on tobacco revenues Negative Connection of Tobacco

Threat Competition both Domestic & International Increasing Tax on cigarettes Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year Hike was 142% for those between 61mm and 70mm long. Regulatory restrictions on cigarettes Ban on smoking

ITC. Touching your life. Everyday

TOWS MATRIX
Strengths Weaknesses

Opportunities

Market expansion Promotion Awareness Affordability

Emphasize on personal care

Threats

Diversification

Strategic alliances with international players

ITC. Touching your life. Everyday

Future SWOT of ITC

Strength Brand More advanced distribution network(ERP,SCM) Management:- CRM Increase in disposable income Weakness Entry of other players Health awareness

Opportunity Increasing retail market Rural market Increasing e-commerce

Threat Bargaining power of suppliers Bargaining power of customers Smuggling Ban on smoking

ITC. Touching your life. Everyday

moderate bargaining power of customer

Low substitutes due to strict laws

High bargainng power of supplier

Porters 5 forces
High rivalry High threats of new entrants

ITC. Touching your life. Everyday

Market share of ITC Ltd.

Outstanding market leader Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. Gaining market share Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.
ITC. Touching your life. Everyday

Source: Annual Accounts/Equity research

H1 Segment Revenue
Rs crs

Half Year ended 30.09.2008 1. Segment Revenue (Net) a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter-segment revenue Net sales / Income from operations

Half Year ended 30.09.2007

Goly (%)

3552 1449 5001 467 2699 1306 9473 1810 7663

3211 1126 4337 412 2127 1038 7915 1351 6564

10.6% 28.7% 15.3% 13.4% 26.8% 25.8% 19.7% 34.0% 16.7%

ITC. Touching your life. Everyday

Segment Cigarettes Paper & Packg. Agri business Hotels FMCG (Others)

Dominance 70% share Packaging board No. 1 in Asia 1of the largest xporters from India ITC Group ranks No.2 20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment
ITC. Touching your life. Everyday

Contribution % Revenue PBIT 77.0% 7.3% 7.0% 4.3% 4.4% 87.7% 10.7% 3.7% 5.4% -7.5%

Source: Equity research reports

CAGR during FY 2005-2008

Category CAGR Growth parameters Pricing power Inward traffic, occupancy Cigarettes 10.9 % Hotels 22.7%

Paper
Agri business FMCGOthers

17.2 %
34.3 % 60.2 %

Capacity utilization, value added products E-choupal, choupal sagar,

Fast track, decent share.

ITC. Touching your life. Everyday Source: Equity research reports

The BCG Matrix for ITC Ltd.

Stars Hotels Paperboards/ Packaging. Agri business. Cows FMCG-Cigarettes ? FMCG- Others ITC Infotech

Dogs Branded apparel Packaged foods

ITC. Touching your life. Everyday

Corporate Strategies
Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities Pursue World class competitiveness in all businesses and across the entire value chain Best-in-class in terms of: Internal Vitality Market Standing Profitability Strategy of Organisation and Governance processes geared to manage multiple businesses Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth
ITC. Touching your life. Everyday

GOVERNANCE, COMMITMENTS & ENGAGEMENTS effective Our Corporate Governance processes are designed to support
management of multiple businesses while retaining focus on each one of them. The practice of Corporate Governance in ITC takes place at three interlinked levels Strategic supervision- by the Board of Directors Strategic management- by the Corporate Management Committee Executive management- by the Divisional/Strategic Business Unit (SBU) Chief Executive assisted by the respective Divisional/SBU Management Committee The role, powers and composition of the Board of Directors, Board Committees, Corporate Management Committee and Divisional Management Committees are articulated and available on the Companys corporate website.

ITC. Touching your life. Everyday

Critical Success Factor

SITE AND LOCATION POSITIONING AND GUEST PROFILE FINANCIAL STRENGTH BRAND RECOGNITION YIELD MANAGEMENT DIFFERENTIAL PRICING

ITC. Touching your life. Everyday

Positioning of ITC

ITC. Touching your life. Everyday

SPANCOP
S:- Suspect who can buy our product P:- Prospect the chances and needs for which customers may buy the product A:- Approach the prospect with the USPs of our product N:- Negotiate the deal for the product C:- Closing of deal O:- Get the order P:- Payment follow up
ITC. Touching your life. Everyday

Cigarettes
ITC, 32% owned by British American Tobacco Plc., raised prices of its Gold Flake and Classic cigarette brands ITC commands around 70% of India's Rs 130 bn domestic cigarette market (value terms). Out of the top 10 cigarette brands in India, 6 belong to ITC.
ITC. Touching your life. Everyday

OBJECTIVES
Cigarette revenues to increase by 9% during FY09 as a result of the full impact of price hikes and improved realizations on account of favourable product mix. The company expect to register 17% CAGR in net profit over FY09-11. At the current market price of Rs175, the stock is trading at EPS of Rs12.1.

ITC. Touching your life. Everyday

Cigarettes Insignia (Wills) KSFTIK Regular (Rich Gold) IK Crystal Blue Ocean Blue IK Menthol B&H Special B&H Light Classic Regular Classic Mild Classic Ultra Mild Classic Menthol Gold Flake Kings Gold Flake Light Silk Cut Kings 555 Wills Navy Cut Wills Navy Cut Light

Sizes 97mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 84mm 74mm 74mm

Prices 100/88/88/88/88/100/100/88/88/88/88/54/44/44/24/34/-

Places

ITC. Touching your life. Everyday

ITCs Distribution channel

ITCs Distribution channel is as follows:COMPANY HUB FACTORY

Carried and forward agent

Wholesale dealer small Wholesale dealer

Retailer consumer

ITC. Touching your life. Everyday

Promotion
Direct marketing:- Sign boards, posters at shops on point of sale Delivery vans Sales force ITC has just packed a classic punch (Jazz,Blues,Rocks) Bann on T.V commercial
ITC. Touching your life. Everyday

 Segmentation Geographic: Rural Urban Demographic: Age Gender Occupation Psychographic: ITC. Touching your life. Everyday Lifestyle

STP

Targeting
M1 P1 P2 P3
ITC. Touching your life. Everyday

M2

M3

POSITIONING
In 70s they have positioned themselves by saying: For the gracious people A touch of Gold "A tribute to the gracious people It is still differentiating itself on the purity and quality of its experience. The brand stands for a celebratory attitude. Celebrate the feeling is the new message
ITC. Touching your life. Everyday

COMPETITOR ANALYSIS
The cigarette market in India has 3 players Godfrey Phillips India (GPI), a Philip Morris affiliate,13% of market share Vazir Sultan Tobacco (VST), a BAT affiliate, 13% of the total market share Golden Tobacco Company (GTC) with 8% of the market share. Domestic competitors Kanhayya tobacco MR tobacco Sapna enterprises Sudarshan tobacco
ITC. Touching your life. ITC still attains a gigantic marketEveryday of 66% share

7S OF ITC
STRATEGY STRUCTURE SYSTEM STYLE SKILLS STAFF SHARED VALUES
ITC. Touching your life. Everyday

CONFRONTATION
NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY
Red & White Super Cavender Magna 4% Panama Plain 4% 4% Four Square Premier 5%

Four Square Specia 5%

Select Filter 5% Marlboro Regular 6%

GOLD FLAKE PREMIUM 29%

GOLD FLAKE KINGS 4%

Silk Cut Premium 11% Wills Navy Cut 7% Silk Cut Kings 5% IK Regular (Rich Gold) B&H Light 1% 2% Classic Regular 4% Classic Ultra Mild 4%

ITC. Touching your life. Everyday

Diversification
ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper. With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E, we expect the non-cigarette businesses to become self-sufficient. The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks.

ITC. Touching your life. Everyday

Per Capita Adult Cigarette Consumption (Sticks)

1662 1753

1190

561

488 141

USA

China

Pakistan

Nepal

India

World Avg.

Source : Based on Cigarette consumption data(2003) from World Cigarettes,ERC Group plc.
ITC. Touching your life. Everyday 40

FINANCIAL ANALYSIS
Gold flake
Profit Before Tax Provision For Taxi ncluding Tax Profit After Tax Add:profit Brought Forward From Previous Year Surplus Available For Appropration 28083757 141700 27942057 15605975 43548032

Tranffered To General Reserve Balance Carried Forward

-------43548032

ITC. Touching your life. Everyday

FINANCIAL ANALYSIS
Wills
Profit Before Tax Provision For Taxincluding Tax Profit After Tax Add:profit Brought Forward From Previous Year Surplus Available For Appropration 3506186 116810 3389376 6251604 9640980

Tranffered To General Reserve Balance Carried Forward

--------9640980

ITC. Touching your life. Everyday

Financial analysis
ratios P.E Ratio Eps Sales Face Value Net Profit Margin Amount 22.54 8.28 3858.65 Rs 1 21.50% Mar08 As per date 27-03-09 Mar08 Dec 08

Last Bonus
Last Dividend Return On Average Equity 27th mar

1:2
350% 25.99

23/05/08
23/05/08 Mar08

186.65

Market capitalization 52 weeks high/low

70340.92 cr 232.40-132.05

ITC. Touching your life. Everyday

HRM POLICY
ITC believes that all its employees must live with social and economic dignity and freedom, regardless of nationality, gender, race, economic status or religion. ITC upholds international human rights standards, does not condone human rights abuses, and creates and nurtures a working environment where human rights are respected without prejudice. The Corporate Human Resources function conducts nondiscrimination reviews annually on a sample basis with unit heads and through on-site assessments. ITC Unit has appropriate systems and checks to ensure compliance with the Policy and statutory provisions, including means for filing of grievances, collective bargaining agreements and minutes from worker meetings.
ITC. Touching your life. Everyday

CONTD..
ITC does not employ any person below the age of eighteen years in the workplace. ITC prohibits the use of forced or compulsory labour at all its units. No employee is made to work against his/her will or work as bonded/forced labour. All major changes in operations involving work processes, manning norms and other productivity linked issues are carried out after discussions with the employees and the recognized unions at each location. ITC is committed to providing a safe and healthy work environment to all its employees. These policy guidelines on HIV/AIDS are an endorsement of this commitment and, in particular, of the Company's commitment to specific programmes and actions in response to the HIV epidemic.
ITC. Touching your life. Everyday

OPERATIONS AND LOGISTICS

Operation management emphasis the current programs of an organizations and planning which essentially deals with the future and two intimately related activities. A distinction should be made between planning and forecasting . Planning departments are key in critiquing strategies ,crystallizing goals ,setting objectives, maintain control. NEEDS FOR STRATEGY: 1) resources are finite 2) uncertainty about competitive strength and behavior 3)when commitment is irreversible

ITC. Touching your life. Everyday

Contd
Logistic/supply chain management enabling technologies cover a wide spectrum of technology that facilitates smooth flow of goods and services and related information as well as integration of business processes. The overall competitiveness of industry would increase by having proper operations and logistic managements.

ITC. Touching your life. Everyday

Research and development

ITC is committed to delivering world class product and services. this requires clear focus on continuously striving to create a higher value to customers by achieving excellence in all companies operations. ITC development of its integrated quality management system (IOMS) is based on its strong foundation of implementing ISO9001:2000,ISO14001,OHSAS18001,SA8000,HACCP(for foods) and IQRS(Performance rating and benchmarking of the quality management system. ITC R&D centre are at bengalure,hyderabad,bhadrachalam,rajamundry,the company has assembled a pool of world class scientist focused on providing the requiste R&D support system.
ITC. Touching your life. Everyday

Contd
ITC research and developed facilities Rajahmundry in AP cover all aspects of tobacco crop cultivation. its collaboration with the central tobacco board research institute and tobacco board ITC pioneered FCV tobacco cultivation in India and introduced the burley and HDBRG varieties.

ITC. Touching your life. Everyday

Information system in ITC

IT plays a very critical role in driving the ITC business strategies. IT is an enabler of the business process to ensure business growth through efficient management of operations in the value chain. IT creates new business process or restructure the current business process to enhance customer service availability , efficient manufacturing / supply chain operations etc

ITC. Touching your life. Everyday

HI-TECH SUPPLY SOLUTIONS

Thousands of small retailers in India who sell cigarettes and confectionery supplied by ITC Ltd, and who have thus far had to wait for the next arrival of the companys delivery van. Place orders through mobile phones Vans go without knowing actual demand so after using this they can save cost as well as time. Mobility based applications can bring down the cost of operation by 20-30% from the manual basis of operation

ITC. Touching your life. Everyday

FUTURE OF CIGARETTES
An average of 2,800 people die every day in India with tobacco-related diseases. Cancer of lungs, lips, tongue, oral cavity, throat and larynx, uterus and urinary bladder are some of the common tobacco-related diseases. Adding some 184 million people consume cigarettes, beedis and gutka every day. ITC researchers are continuously doing research on ayurvedic cigarette which would be harmless.
ITC. Touching your life. Everyday

ITC CAN BE A FOLLOWER

Guardian pharmacy has launched a herbal cigarette named HONEYROSE which is 100% harmless. Nicotine-free, tobacco-free cigarette seemed like an oxymoron Cigarettes are made with naturally grown Marshmallow herb, Red Clover and Rose As ITC has got more experience and brand image it can improve its quality and thus can tab the health consious people FORTRESS STRATEGY
ITC. Touching your life. Everyday

CERTIFICATIONS, HONOURS & AWARDS

All the Environment, Health and Safety (EHS) Management systems & Sustainability Reporting in ITC conform to the best international standards. SA 8000 - Social Accountability Leaf processing plants at Chirala and Anaparti, Cigarette factory at Kolkata and SNPL factory at Simra have achieved this certification. OHSAS 18001- Occupational Health & Safety Management Systems All the manufacturing units of ITC and Corporate EHS Department have achieved this certification. ISO 14001- Environment Management Systems All manufacturing units of ITC, all the major hotels, Corporate EHS Department & ITC R&D Centre at Bengaluru have achieved this certification.

ITC. Touching your life. Everyday

Recommendation
Improved security for hotel guests. Floor access control in hotels through key card system. Precision analysis of products in Food Business. Process optimisation for product development in Food Business. Automation of lighting controls. Use of Solar energy for hot water generation and outside area illumination. Installation of PNG (Piped Natural Gas) fuelled generator sets and PNG fired calendar and tumbler drier machines in hotel laundries. Improvements to reduce heat gain/cooling losses from building envelops in hotels. Impact of measures for reduction of energy consumption and consequent impact on the cost of production of goods.

ITC. Touching your life. Everyday

CONCLUSION
ITC promoting their brands through advertisement campaign as well as door to door promotion. ITC is also focusing on Retailers and Wholesalers to promote their brand. The demand of their product in very low, because people dont know about their brands very well. ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses. ITC now offering more margins, exiting offers and long credit period to retailers and wholesalers.

ITC. Touching your life. Everyday

ITC. Touching your life. Everyday